Cyrus Ikahu Kiririu v Equity Bank Kenya Limited, Keysian Auctioneers & Registrar of Lands Nairobi District Land Registry; Murithi wa Ngigi Michere (Interested Party)

Rule 1 of the Civil Procedure Rules, the 1st Defendant/Applicant seeks the following orders: i. Spent. ii. Spent. iii. That pending the hearing and determination of this suit, this Honourable Court be pleased to grant an order that the rent and all other income generated from L.R No. NAIROBI/BLOCK 105/1855 be deposited in court or with a rent collection agency to be appointed by the Court. iv. That upon conclusion of the suit, all the Rent proceeds collected during the pendency of the suit be paid to MURITHI WAS NGIGI MACHERE, who was the purchaser of the property at the public auction. v. That the costs of the application be provided for. 2. The application is based on the grounds appearing on its face together with the supporting affidavit of Samuel Wamaitha, the Applicant’s Assistant Legal Manager, sworn on even date. THE APPLICANT’S CASE 3. The deponent averred that the 1 st Defendant/Applicant advanced a loan to the Plaintiff, who defaulted in repayment, thereby prompting the Applicant to exercise its statutory power of sale. ELC LC CASE NO. E117 OF 2024 2

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4. He further averred that the Applicant issued the requisite notices and instructed the 2nd Defendant to sell the charged property by public auction. He contended that the property was sold at a public auction, but the purchaser has been unable to transfer the property despite having paid the purchase price in full, owing to a subsisting court order. 5. He argued that the Plaintiff had previously filed Nairobi MCELC Case No. E395 OF 2022, which was dismissed on 11 th October 2023 for want of prosecution. 6. He contended that the purchaser has been unable to collect the rental income despite having paid the purchase price in full. He further argued that it is only fair and just that the rental income be deposited in an escrow account held by both parties to prevent either party from unjustly enriching itself. THE PLAINTIFF/RESPONDENT’S CASE 7. The Plaintiff filed a replying affidavit dated 15 th June 2026 in opposition to the application. 8. The Respondent application averred challenging that the the Court’s Interested Party’s jurisdiction was dismissed by the ruling dated 31 st October 2025. Being aggrieved, the Interested Party filed a Notice of Appeal dated 17th November 2025, which is pending hearing and determination. 9. He argued that the pending appeal is a material obstacle to the hearing of the application, as it challenges this Court’s jurisdiction to entertain this suit. He further argued that the ELC LC CASE NO. E117 OF 2024 3

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Court would be embarrassed if the Court of Appeal determined that this Court lacks jurisdiction to hear and determine this suit. He asserts that a court should stay further substantive proceedings once a party challenges its jurisdiction. He maintained that it is contradictory and unconscionable for the Interested Party to challenge the Court’s jurisdiction on the one hand while, on the other, seeking substantive relief through the 1st Defendant’s application. 10. He maintained that on 29th May 2026, the Interested Party’s advocate served the 1st Defendant’s submission on his advocate, thereby indicating that the Interested Party was actively participating in the prosecution of the application. 11. He further averred that the status quo orders dated 21 st March 2024 have neither been varied, set aside, nor discharged. He contended that he is entitled to continue collecting the rent since he is in possession of the suit property. He argued that the order requiring the deposit of rent would alter the status quo that the Court expressly ordered to be maintained. He maintained that, as the registered owner of the suit property, he has the legal right to possession and to the proceeds and profits of the property, including rental income. He further argued that the Interested Party has not filed any proof of payment of the full purchase price for the suit property. In conclusion, he urged the Court to dismiss the application with costs. ELC LC CASE NO. E117 OF 2024 4

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12. The application was canvassed by way of written submissions THE 1ST DEFENDANT/APPLICANT’S SUBMISSIONS 13. The Applicant filed its submissions dated 27th May 2026. 14. On behalf of the Applicant, Counsel outlined the following issues for the Court’s determination: a) Whether the application is urgent and properly before the Court; b) Whether the Applicant has established a prima facie case to warrant the orders sought; c) Whether the balance of convenience tilts in favour of granting the orders; and d) Whether the unopposed nature of the application entitles the Applicant to the prayers sought 15. Regarding the first issue, Counsel submitted that the rent from the suit property is collected by the 2 nd Defendant, who has no legal entitlement to retain the rental proceeds. Counsel submitted that preserving the rental proceeds would be consistent with the overriding objective under Sections 1A and 1B of the Civil Procedure Act. 16. Regarding the second issue, Counsel submitted that the Plaintiff has not challenged the validity of the statutory notices issued. It was further submitted that after the notices expired, the Applicant's statutory power of sale accrued, the property was auctioned by a licensed auctioneer, and upon the fall of the hammer, the purchaser paid the full purchase ELC LC CASE NO. E117 OF 2024 5

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price. He argued that the Court subsequently halted the completion of the transaction. 17. Counsel submitted that the Applicant would suffer irreparable harm that could not be adequately compensated by an award of damages if the orders sought are not granted. To support this point, Counsel relied on Paul Gitonga Wanjau v Gathuthi Tea Factory Co Ltd & 2 others (2016) eKLR. Counsel argued that the 2nd Defendant, as the agent in sale, is currently collecting the rent, and that if the funds are dissipated, the Applicant would have no recourse. It was further submitted that the purchaser was threatening to sue the Applicant for a refund of the purchase price, and that, if successful, the Applicant would lose both the security and the loan monies. Counsel submitted that the Plaintiff is collecting rent indirectly through the 2nd Defendant, yet no longer has a redeemable interest. To support this argument, Counsel relied on Mrao Ltd v First American Bank of Kenya Ltd & 2 others, where the Court of Appeal held that a charge is entitled to the rents and profits of the charged property upon taking possession or upon the appointment of a receiver. 18. Counsel submitted that the balance of convenience favours the granting of the orders sought. THE INTERESTED PARTY’S SUBMISSIONS 19. The Interested Party filed his submissions dated 29 th May 2026. ELC LC CASE NO. E117 OF 2024 6

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20. On behalf of the Interested Party, Counsel identified the following issues for the Court’s determination: a) Should the Plaintiff and his agents be restrained from collecting rent and all other forms of income for the suit property; b) How should the rental income and all other income generated from the suit property be preserved pending the hearing and determination of the suit; c) How should the suit property be managed pending the hearing and determination of this suit. 21. Regarding the first issue, Counsel submitted that the 1 st Interested Party purchased the suit property from the 1 st Defendant at a public auction on 2 nd February 2024. Counsel argued that the Plaintiff, as the previous owner, was not challenging the sale of the suit property to the Interested Party but was seeking to have the 1st Defendant pay him Kshs 3,850,000/=, which he claims is the undervalue of the suit property. 22. Counsel submitted that the status quo orders issued on 21 st March 2024 are prejudicial to the Interested Party, as they require the Plaintiff to continue collecting rental and other income from the suit property. Counsel submitted that the Interested Party is an innocent purchaser for value of the suit property, which comprises 22 rental units generating monthly income of Kshs 100,500/=. Counsel further submitted that the rental income collected by the Plaintiff ELC LC CASE NO. E117 OF 2024 7

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from the date of the sale, amounts to Kshs 1,608,000/= to the detriment of the Interested Party. 23. Counsel submitted that Courts have consistently ordered that where ownership is disputed, income generated from the suit property should be preserved pending final determination of the suit. To support this argument, Counsel relied on Park Towers Ltd v John Mithamo Njika & 7 others (2014) eKLR and Maina v Orina & another. 24. Regarding the second issue, Counsel proposed that all rental income derived from the suit property should be deposited in an interest-earning account in the joint names of the advocates for the parties within 30 days of the date of the ruling. 25. Counsel further submitted that the Plaintiff should be ordered to surrender Kshs 1, 608, 000/= being rental income already collected and to have the same deposited into a joint interest-earning account pending the hearing and determination of the suit. 26. Regarding the third issue, Counsel submitted that the parties should agree on an independent property manager within 30 days, failing which the Court should appoint an independent property manager to manage the property. 27. In conclusion, Counsel urged the Court to allow the application as prayed. THE PLAINTIFF’S SUBMISSIONS ELC LC CASE NO. E117 OF 2024 8

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28. The Plaintiff filed his submissions dated 15 th June 2026. On behalf of the Plaintiff, Counsel identified the following issues for the Court’s determination: a) Whether the instant application is premature due to the pendency of the Appeal c) Whether the Applicant is entitled to the orders sought. 29. Regarding the first issue, Counsel submitted that this Court lacks jurisdiction to entertain the application, as there is a pending appeal challenging this Court's jurisdiction. 30. On the second issue, Counsel submitted that the Plaintiff is in possession of the suit property and ought to continue collecting the rental income, as the order preserving the status quo has neither been varied, set aside nor discharged. Counsel relied on Ali Dhidha Mohamed & Another v Mohamed Omar Khamis & Another (2018) to support the principle that the status quo ought to be maintained pending the determination of the dispute. 31. Regarding the third issue, Counsel submitted that the 1st Defendant and the Interested Party had failed to satisfy the principles for granting an interlocutory injunction as set out in Giella v Cassman Brown & Co. Ltd. 32. Counsel argued that the Interested Party did not establish a prima facie case because he failed to demonstrate he was a bona fide purchaser for value, particularly by not proving ELC LC CASE NO. E117 OF 2024 9

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that valuable consideration was paid for the property. It was also argued that the 1st Defendant similarly failed to prove that the purchase price was paid. 33. Counsel further submitted that neither the 1st Defendant nor the Interested Party had demonstrated that they would suffer irreparable harm if the status quo were maintained. Counsel contended that the Interested Party had not demonstrated any legally protectable right to the rental income that had been infringed or was threatened with infringement. 34. Regarding the balance of convenience, counsel contended that it favoured maintaining the current status quo. Counsel cited Gichohi v Njangiru to substantiate the assertion that rental income should be preserved until the hearing and determination of the case. ANALYSIS AND DETERMINATION 35. Having considered the application, the responses and the rival submissions, the issue that falls for determination is whether the Applicant is entitled to the orders sought. 36. Before delving into the merits of the application, it is imperative for the Court to determine whether the pending appeal bars the determination of the present application. 37. The Plaintiff contends that this Court should not proceed to substantive proceedings because the Interested Party has lodged a Notice of Appeal against the ruling on jurisdiction. ELC LC CASE NO. E117 OF 2024 10

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38. The mere filing of a Notice of Appeal does not, in itself, operate as a stay of proceedings or automatically deprive the Court of jurisdiction to deal with matters before it. No order has been presented to this Court to stay these proceedings or to restrain the Court from dealing with this application. Accordingly, the objection that the application is incompetent solely by reason of the pendency of the appeal cannot succeed. 39. Turning to the substantive issue, the Applicant seeks an order to preserve the rental income pending the hearing and determination of this suit. 40. The record shows that the Applicant exercised its statutory power of sale and that the suit property was sold at public auction on 2nd February 2024. The Interested Party asserts that he purchased the property and paid the purchase price in full. Conversely, the Plaintiff asserts that he remains the registered proprietor and is entitled to possession and the rental income. The dispute, therefore, concerns the legal effect of the sale and the respective rights of the parties in relation to the suit property and the income derived therefrom. 41. At the interlocutory stage, the court is not called upon to determine whether the statutory power of sale was validly exercised, whether the purchaser acquired an enforceable interest in the property, whether the entire purchase price was paid, or whether the Plaintiff is ultimately entitled to the rental income. Those matters are for determination at the ELC LC CASE NO. E117 OF 2024 11

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hearing of the suit, upon consideration of the evidence and the parties' respective cases. 42. The immediate question is whether the rental income should be preserved 43. The Applicant contends that unless rental income is preserved, the purchaser may be unable to recover the purchase price and the Applicant may suffer loss. In my view, that apprehension does not demonstrate irreparable injury. Rental income is ascertainable and can be accounted for. The Applicant has not shown that any loss arising from rental income would be incapable of adequate compensation. 44. However, the Interested Party raised a legitimate concern that the rental income should not be dissipated while the ownership dispute remains unresolved. The Interested Party contends that the property comprises 22 rental units generating approximately Kshs 100,500/- per month. He further contends that Kshs 1,608,000/- has been collected since the auction held on 2nd February 2024. 45. The Plaintiff relied heavily on the status quo order dated 21 st March 2024. He contends that the order permits him to remain in possession and to collect rent, and that the application, in effect, seeks to vary that order. At this stage, it would be premature for the Court to determine who is entitled to the rental income. 46. A status quo order is intended to preserve the existing state of affairs pending the determination of the dispute. It does ELC LC CASE NO. E117 OF 2024 12

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not confer final proprietary rights on any party. Preserving the status quo does not entitle a party to dissipate income generated by the disputed property. The court may adopt a neutral arrangement under which income is identifiable and can be preserved, thereby protecting the interests of all parties without determining entitlement. In Paul Gitong Wanjau v Gathuthi Tea Factory Co Ltd & 2 others 2016 eKLR, the Court observed that, in determining the balance of convenience, it considers the comparative harm likely to be suffered by the parties and seeks to maintain the status quo. In the matter at hand, the balance of convenience favours preserving the income in a neutral account. 47. The Interested Party also seeks an order requiring the Plaintiff to surrender Kshs 1,608,00/- collected from the property since 2nd February 2024. The figure is disputed, and the material demonstrate before its the precise court basis or does not provide sufficiently a sufficient accounting trail. In light of the foregoing, it would be premature to make a mandatory order requiring the Plaintiff to pay that specific amount at this interlocutory stage. 48. Similarly, the Court finds no sufficient basis at this stage for appointing an independent property manager. 49. In light of the foregoing, I find that the application dated 9 th October 2024 partially succeeds in the following terms: a) Pending the hearing and determination of the suit, all rent and other income generated from L.R. ELC LC CASE NO. E117 OF 2024 No. Nairobi Block 105/1855 shall be 13

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deposited into an interest-earning joint account in the names of the advocates for the Plaintiff and the Interested Party within 21 days from the date hereof. d) No party shall withdraw or otherwise deal with the funds deposited in the joint interest-earning account without the order of this court. e) The Plaintiff shall within 21 days render an account of all rental income received from the suit property from 2nd February 2024 to the date hereof. 50. For the avoidance of doubt, these orders are preservatory in nature and shall not be construed as determining ownership of the suit property, the validity of the auction sale, or the ultimate entitlement of any party to the suit property. RULING SIGNED, DATED, AND DELIVERED VIA MICROSOFT TEAMS THIS 25TH DAY OF SEPTEMBER, 2026 ……………………………………. HON. T. MURIGI JUDGE IN THE PRESENCE OF: Ochieng for the Plaintiff Wanda for the 1st Defendant Vena- Court Assistant ELC LC CASE NO. E117 OF 2024 14

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